Gold GC1 - A New ATH is Simply a Fantasy. But, a Big Trade Brewsis this thing that has traded like a boat anchor, as much of a boat anchor as Bitcoin . More or less not moving at all. Yet, as with all things, consolidation periods only last for so long before the volatility picks up again to draw in new attention.
This chart is a huge amount of time and very wide ranges and so it's very hard to stuff the important info into the part associated with this call. You'll have to read my wall of text for it to all make sense.
Many have wondered, myself included, how Gold could have failed to make a new high during its post-Russian Federation invasion of Ukraine pump to $2078. I myself traded this during that time and had months worth of longs established at $1,600, $1,700, $1,800 and missed the chance to get out at a profit, waiting for it to set a new high.
I was very confused.
Over the months, I have upgraded myself significantly and I now understand why. It's simple:
Market makers were simply attacking the area above the '11 $1,923 ATH. The fact that no new high was made indicates that MMs are heavy on the sell. Unfortunately for goldbugs, this means that a new all time high is literally a fantasy. It will happen, but not until significant downside conditions are met.
The total range equilibrium between the $1,069 low in '16 and the post-COVID ATH is roughly $1,550. Until gold trades below this area and there are indications longs are accumulating, there will not be a move towards an ATH again.
This can be seen with a study of the monthly:
And the Weekly:
This is reality. Just get in line with reality and you'll be able to:
a) Save losses
b) Book gains
Gold has traded, since September, underneath a key low, and has not followed its counterpart Silver in taking significant north-side runs. Today during FOMC madness, the one time that gold really ought to have gone up to draw in buyers based on the notion of inflation hedging, it instead ran into resistance at that $1,670 level.
This mostly assures that gold is headed to new lows.
In my opinion, there are two scenarios, the first is much more likely than the second, and bodes well for bulls:
1) Gold trades to the low $1,500s for a discount versus the COVID-hysteria lows for the first time in almost two years.
Should it show signs of life here, Gold should reverse and head back into the $1,850-$1,900 area. But be warned this type of trading pattern will not amount to a run towards a new all time high, although it will feel like it, and all the "gurus" will assure you it will be.
This type of trading pattern will constitute more selling, because a longer term move downwards is happening.
2) Gold loses all life and heads towards the $1,350 area. This will be long term bullish because, after what is likely to be at least a year of accumulation, it means that a new all time high is inbound.
I believe gold will drop as equities rally more. I think that when equities start to dump, this time gold will go up, because it will drag in goldbugs and ancap types who think the dollar is on the way out and the gold standard is coming back.
After you buy their bags at $1,900, gold will be crushed and you'll buy high and sell back low.
Note that in terms of Commitments of Traders , although commercials are their most long they've been in three years, they're still not net long. You won't see them be net long until the $1,300s.
But before then, we should see Gold mimic the patterns of silver , because more selling is in store.
A final word: The biggest market risk right now is not the Federal Reserve , or a recession. Neither is it Credit Suisse collapsing. A lot of things are going to go up, and may even go up a lot (Don't believe it? Take a look at what the Dow Jones just did. Some components made a new all time high in the middle of your "Hawkish Federal Reserve" and your "recession.").
The greatest market risk is that the Chinese Communist Party will either collapse internally or be thrown away by "Emperor" Xi Jinping as he, and the nation of China, struggle to survive what is happening.
When that day happens, 20% days down on the indexes are going to come and there won't be any bounces.
Wall Street won't be in such a mood to market make anymore, because all their collusion with the Chinese Communist Party and their implicit passive and active support of the organ harvesting persecution of Falun Gong will have many of their members scuttle into hiding.
Just wait and see. Nobody thought the USSR would ever fall, and yet, it did. Overnight.
Tl; dr Gold --> $1,500 with little upside in between. This is a bear trap.
Then big bounce to $1,850. But the big bounce is a bull trap.
